Life insurance records strong growth in first two months

Growth rates averaged around 6.03 per cent on year in the first quarter, a five-year record high, showed a recent report by the Insurance Supervisory Authority (ISA) under the Ministry of Finance.

The segment’s total value of new business (VONB) soared by 44 per cent on year to VND1.249 trillion ($59.47 million) between January and February, when life insurance companies signed 179,828 contracts.

Mixed insurance accounted for 43 per cent of total revenues, while investment-linked insurance, Term Life Insurance and pension insurance made up 39.89 per cent, a growth of 4.74 per cent and 0.64 per cent, respectively. Other services including whole life insurance, pure endowment insurance and annuity insurance accounted for 1.2 per cent.

Industrial insiders attributed the strong growth in VONB between January and February to efforts exerted by top insurers to maintain their market share and positive business results among the wave of newcomers. The launch of a strategy to introduce new products among insurers in late 2014 has also contributed to the growth.

Prudential, Manulife, Dai-ichi, Hanwha Life, Cathay, Fubon, Aviva and Generali focused on providing mixed insurance packages during the period. Together with ACE, Dai-ichi, AIA, Baoviet Insurance and Prudential were also among the life insurance companies that signed huge numbers of Universal Life Insurance contracts.

In terms of new business market share, Baoviet Insurance took the lead with 23.11 per cent, followed by Prudential with 22.1 per cent, Manulife 12.26 per cent, AIA 10.43 per cent, Dai-ichi 9.35 per cent, Generali 6.33 per cent, ACE Life 4.18 per cent, Hanwha Life 3.29 per cent, Prevoir 2.09 per cent, PVI Sun Life 1.58 per cent, Aviva 0.79 per cent and Cathay 0.7 per cent.

Hanwha Life Vietnam saw its value of new business grow by 126 per cent, to nearly VND50 billion ($2.38 million) in the first two months, while Generali Vietnam’s premiums rose by nearly 300 per cent on year in 2014. Generali also took the lead among the insurers that had the highest average value per new contract of VND30.92 million ($1,472).

Data from the ISA has also estimated that total premiums of life insurance players in the first two months were at VND3.074 trillion ($146.38 million), up 25 per cent from the same period last year. The number of valid contracts has also increased by 13.5 per cent to nearly 5.85 million.

In terms of premium market share, as of end-February 2015, Prudential took the lead with 30.1 per cent, followed by Baoviet Insurance with 27,7 per cent, Manulife 12.1 per cent, AIA 10.7 per cent, Dai-ichi 7.7 per cent, ACE 4 per cent, Generali and Hanwha 2.1 per cent each and Prevoir 1.2 per cent.

However, life insurers need to take proper measures to maintain their growth rates in the coming months as failure of some players would adversely affect market performance. In fact, many insurers’ yearly business results failed to meet market expectations, although they reported a strong growth in revenue the first months. For example, in the first half of 2014, a strong increase of 244 per cent in the number of insurance contracts failed to cover a fall of 12 per cent in the figure of individual contracts, according to statistics by the Association of Vietnamese Insurers.

In 2013, PVI Sunlife made a record revenue of VND1 trillion ($47.6 million) after nearly one year of operation, contributing to the segment’s increasing total VONB to nearly 47 per cent, to VND7.603 trillion ($363.05 million). However, in 2014, this newcomer had its ranking fallen to 9th from the earlier 3rd in terms of new business market share with 2.56 per cent.